Press Information Bureau

Government of India

Ministry of Finance

15-March-2012 12:33 IST

Economic Survey Forecasts 2.5 Percent Growth for AGRO Sector

Survey Suggests FDI in Multi Brand Retail to Address Infrastructure GAPS

The higher levels of agricultural output and ample food stocks as on date and the levels of reservoir storage this year augur well for bringing down headline inflation in the next fiscal. It has been observed by the Economic Survey 2011-12 presented today by the Union Finance Minister Shri Pranab Mukherjee in the Parliament. However, the Survey expresses concern over the growth rate in agriculture sector which has fallen short of planned target inspite of record food grain production. During the current Five Year Plan it is estimated at 3.28 percent against the target of 4 percent. According to Survey, agriculture and allied sectors are estimated to achieve a growth rate of 2.5 percent during 2011-12. Agriculture including allied activities accounted for 13.9 percent of Gross Domestic Products (GDP) in 2011-12.

The successive high production levels boosted the stock position of foodgrains in the central pool and as on February 1, 2012 it was 55.2 million tonnes comprising 31.8 million tonnes of rice and 23.4 million tonnes of wheat. This is adequate for meeting the requirements under the targeted public distribution system (TPSD) and welfare schemes during the current financial year. The Survey says that as per the Second Advance Estimates, production of foodgrains during 2011-12 has been estimated at 250.42 million tonnes.

Expressing concern over decline in the area under food grains cultivation the Survey calls for speedy improvement in yield through adequate investment in research and development. Pooling of many land holdings may yield better results for which land laws for leasing with sufficient safeguards in place should be considered. Addressing infrastructure requirements in the agriculture sector, especially storage, communication, roads and market should be priority.

According to the Survey, the outlook for the next fiscal remains bright but given the rapidly rising levels of demand for food there is a need to consider some policy options to ensure brighter medium term outlook. These options could, inter alia, be regular imports of agricultural commodities in relatively smaller quantities with an upper ceiling on quantity should to be decided annually, relatively well in advance, after assessing the likely domestic situation in terms of production and consumption requirements. According to Survey, “improving mandi governance, promoting inter-state trade by eliminating multiple levies, taking perishables out of the ambit of the APMC Act, developing a ‘farm-to-fork’ retail supply system, and addressing the investment gaps related to post harvest infrastructure for agricultural produce including through FDI in multi-brand retail” may help in improving agriculture commodities management in the country.

DSM/RM/NC

FDI in multi-brand retail proposed to address agricultural infrastructure gaps and improve post-harvest supply chains. The Survey urges prioritising investment in post-harvest infrastructure and agricultural R&D, considers pooling land holdings and land leasing frameworks with safeguards, and proposes regulatory reforms including improving mandi governance, promoting inter-state trade by eliminating multiple levies, taking perishables out of the ambit of the APMC Act, developing a farm-to-fork retail supply system, permitting FDI in multi-brand retail, and managed regular imports with annually decided ceilings to address supply and infrastructure gaps.